INTERNAL CONTROL
The purpose of the system of internal accounting controls is to make sure a business is operating according to the policies and plans of management in regards with measures that have a direct relation to the protection of assets and to the reliability of accounting information. A system of internal control in a business is set up to safeguard the business?resources against waste or fraud, to guarantee the accuracy of accounting information, to assess performance of the company and to make sure that company policies are being followed. To attain well functioning internal control, there are certain guidelines that can be used. The first would be to establish clear lines of responsibility. Businesses should assign responsibilities to an individual or a department. Clear descriptions of each department should be recorded to avoid any possible problems later. Each type of transaction should have routine procedures to be followed in order to direct activities of the business as planned, according to company policies. Every transaction should be authorized, approved, executed and recorded. The most important measure to take is probably the subdivision of
An inventory count is also done on a regular basis (twice a year). An external auditor also conducts an audit every year. Management ensures that all financial information is reliable by dividing duties. By having internal auditors who monitor the accounting controls, the efficiency and reliability of accounting information can improve. By reconciling the accounts to one another, they are proving the equality of subsidiary ledgers to the controlling accounts. The business I chose for my report, FGI world, is a private counseling firm with offices around the world. A measure that could be taken to enhance the effectiveness of internal control in this company would be to introduce internal auditing. This process will help identify any errors. That is to organize a plan of operation to set goals for each division of the business. In this business all payments are by cheques and no credit cards or cash payments are processed. However, management ensures that other assets such as office supplies are protected from waste and fraud by having an employee you distributes supplies and has a logging book where employees receiving the supplies have to sign off. There are also different employees to invoice the customer and to apply the payments to the customers account. To ensure that fixed assets are safe every fixed asset purchase is labeled or given a serial number. To ensure control over cash payments and cash receipts in the business duties are divided among the employees. This practice helps them monitor the use of the office supplies.
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Acceptance Essays
